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Gambling has had many different meanings depending on the cultural and historical context in which it is used. Currently, in Western societies, it has an economic definition, referring to “wagering money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods”. Typically the outcome of the wager is evident within a short period of time.

Gaming^[1] in this context is normally used to describe instances where the activity has been specifically legalized by applicable laws or where the activity is exempted from the criminal laws. The two words are not mutually exclusive. Gaming companies offer legalized gambling activities to the public.^[2]

Contents 1 Legal aspects 2 Gambling variables 3 Types of gambling 3.1 Casino games 3.1.1 “Beatable” casino games 3.1.2 “Unbeatable” casino games 3.2 Non-casino gambling games 3.3 Fixed-odds gambling 3.3.1 Parimutuel betting 3.3.2 Sports betting 3.4 Arbitrage betting 3.5 Other types of betting 4 Staking systems 5 Actions typically not regarded as gambling 6 Psychological aspects 7 Associated word usage 8 By country 9 See also 10 References 11 External links

[edit] Legal aspects

Because many religious authorities generally disapprove of gambling to some extent, and because gambling can have adverse social consequences, most legal jurisdictions limit gambling to some extent. Some Islamic nations prohibit gambling; most other countries regulate it.^[3]

Because contracts of insurance have many features in common with wagers, legislation generally makes a distinction, typically defining any agreement in which either one of the parties has an interest in the outcome bet upon, beyond the specific financial terms, as a contract of insurance. Thus a bet on whether one’s house will burn down becomes a contract of insurance, as one has an independent interest in the security of one’s home.

Furthermore, many jurisdictions, local as well as national, either ban or heavily control (by licensing) gambling. Such regulation generally leads to gambling tourism and illegal gambling. The involvement of governments, through regulation and taxation, has led to a close connection between many governments and gaming organisations, where legal gambling provides significant government revenue, such as in Monaco or Macau.

There is generally legislation requiring that the odds in gaming devices are statistically random, to prevent manufacturers from making some high-payoff results impossible. Since these high-payoffs have very low probability, a house bias can quite easily pass unnoticed.^[4]

[edit] Gambling variables

There are three variables common to all forms of gambling:

• How much is being wagered, the initial stake (in money or material goods).
• The predictability of the event.
  • In mechanical or electronic gambling such as lotteries, slot machines and bingo, the results are random and unpredictable; no amount of skill or knowledge (assuming machinery is functioning as intended) can give an advantage in predictability to anyone.
  • However, for sports events such as horse racing and soccer matches there is some predictability to the outcome; thus a person with greater knowledge and/or skill will have an advantage over others.
• The odds agreed between the two (or more) parties to the wager; where there is a house or a bookmaker, the odds are (quite legally) arranged in favour of the house.

The expected value, positive or negative, is a mathematical calculation using these three variables. The amount wagered determines the scale of an individual wager (bet); the odds and the amount wagered determine the payout if successful; the predictability determines the frequency of success. Finally the frequency of success times the payout minus the amount wagered equals the “expected value” The skill of a gambler lies in understanding and manoeuvring the three variables so that the “actual value” is positive over a series of wagers.

[edit] Types of gambling

[edit] Casino games

While almost any game can be played for money, and any game typically played for money can also be played just for fun, some games are generally offered in a casino setting.

[edit] “Beatable” casino games

With proper strategy, a smart player can create a positive mathematical expectation.

• Blackjack—with card counting unless a continuous shuffler is used
• Pai Gow Poker and Tiles—player-dealt
• Parimutuel betting
• Poker (Also recognized as a game of skill)
• Slot machines—where progressive jackpots or bonuses reach a certain break-even point
• Sports betting
• Video poker—with proper pay table and/or progressive jackpot

[edit] “Unbeatable” casino games

These have a negative expectation, players as a group will lose in the long run.

[edit] Non-casino gambling games

[edit] Fixed-odds gambling

Fixed-odds gambling and Parimutuel betting frequently occur at many types of sporting events. In addition many bookmakers offer fixed odds on a number of non-sports related outcomes, for example the direction and extent of movement of various financial indices, the winner of television competitions such as Big Brother, election results,^[5]. Interactive prediction markets also offer trading on these outcomes, with “shares” of results trading on an open market.

[edit] Parimutuel betting

Main article: Parimutuel betting

One of the most widespread forms of gambling involves betting on horse or greyhound racing. Wagering may take place through parimutuel pools; or bookmakers may take bets personally. Parimutuel wagers pay off at prices determined by support in the wagering pools, while bookmakers pay off either at the odds offered at the time of accepting the bet; or at the median odds offered by track bookmakers at the time the race started.

[edit] Sports betting

Main article: sports betting

Betting on team sports has become an important service industry in many countries. For example, millions of Britons play the football pools every week.

[edit] Arbitrage betting

Main article: arbitrage betting

Arbitrage betting is a theoretically risk-free betting system in which every outcome of an event is bet upon so that a known profit will be made by the bettor upon completion of the event, regardless of the outcome. Arbitrage betting is a combination of the ancient art of arbitrage trading and gambling which has been made possible the large numbers of bookmakers in the marketplace, creating occasional opportunities for arbitrage.

[edit] Other types of betting

One can also bet with another person that a statement is true or false, or that a specified event will happen (a “back bet”) or will not happen (a “lay bet”) within a specified time. This occurs in particular when two people have opposing but strongly-held views on truth or events. Not only do the parties hope to gain from the bet, they place the bet also to demonstrate their certainty about the issue. Some means of determining the issue at stake must exist. Sometimes the amount bet remains nominal, demonstrating the outcome as one of principle rather than of financial importance.

Betting exchanges allow consumers to both back and lay at odds of their choice. Similar in someways to a stock exchange, a better may want to back a horse (hoping it to win) or lay a horse (hoping it to lose, effectively acting as bookmaker)

[edit] Staking systems

Main article: betting strategy

Many betting systems have been created in an attempt to “beat the bookie” but most still accept that no system can make an unprofitable bet profitable over time. Widely-used systems include:

• Fixed stakes – a traditional system of staking the same amount on each selection.
• Fixed profits – the stakes vary based on the odds to ensure the same profit from each winning selection.
• Due-column betting – A variation on fixed profits betting in which the bettor sets a target profit and then calculates a bet size that will make this profit, adding any losses to the target.
• Kelly – the optimium level to bet to maximise your future median bank level.
• Martingale – A system based on staking enough each time to recover losses from previous bet(s) until one wins.

[edit] Actions typically not regarded as gambling

• Emotional or physical risk-taking where what is being risked is not money or material goods (e.g., skydiving, running for office, asking someone for a date, etc.)
• Buying insurance, as the primary intent of the purchase is to protect against loss, rather than to collect
• ‘Investment’ (such as in the stock market or real estate) with positive expected returns, economic utility, and some underlying value independent of the risk being undertaken
• Starting a new business, as time and effort are also being wagered and the outcome is not known
• Situations where the possibility of winning additional money or material goods is a secondary reason for the wager/purchase (such as buying a raffle ticket to support a worthy cause)
• Prediction markets or knowledge exchanges where the outcome is to encourage the development of market-based mechanisms for resolving questions of science, technology, management, strategy, planning, policy,etc.

[edit] Psychological aspects

Main article: Problem gambling

Though many participate in gambling as a form of recreation or even as a means to gain an income, gambling, like any behavior which involves variation in brain chemistry, can become a psychologically addictive and harmful behavior in some people. Reinforcement phenomena may also make gamblers persist in gambling even after repeated losses.

The Russian writer Dostoevsky portrays in his novella The Gambler the psychological implications of gambling and how gambling can affect gamblers. He also associates gambling and the idea of “getting rich quick“, suggesting that Russians may have a particular affinity for gambling. Dostoevsky shows the effect of betting money for the chance of gaining more in 19th-century Europe. The association between Russians and gambling has fed legends of the origins of Russian roulette.

[edit] Associated word usage

• The English expression “I bet that ____”, meaning “I consider it very probable that ____”, need not carry any suggestion of the speaker intending to gamble.
• The English word hazard originated as Arabic az-zār or al-zār, which meant a type of dice game. Compare also the English word “dicey” meaning “risky”.
• Scientists have dubbed certain random-number-based calculation algorithms the “Monte Carlo method“.
• Even money, as a gambling term, describes a wagering proposition with even odds - if one loses a bet, one stands to lose the same amount of money that the winner of the bet would win (less, of course, the vigorish or “juice”). The term has come to have meaning in the wider English usage beyond actual gambling, however, as a way of describing an event whose occurrence is about as likely to occur as not. Compare 50 50.

[edit] By country

• Gambling in Macau (PRC)
• Gambling in the United Kingdom
• Gambling in the United States

[edit] See also

• Online gambling
• Online casino
• Mobile gambling
• Casino game
• Casino Night
• Casino comp and junket
• Casino token
• Spread betting
• Dutch book
• Gaming mathematics
• Gambler’s ruin
• Gambler’s fallacy
• Economic materialism
• List of notable wagers
• Institute for the Study of Commercial Gaming
• Gambling writers
• Category:Gambling

[edit] References

[edit] External links

• DMOZ Gambling directory
• Yahoo Gambling directory
• Gambling directory
• Gaming Studies Research Center - at University of Nevada, Las Vegas
• Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno